KUALA LUMPUR - Malaysia's smartphone market closed 2021 with over 12 million units according to the latest International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker. Aggressive shipments in 2021H1 fueled this growth despite a decline for both supply and demand in the second half of the year.

"A government subsidy program plus relatively uninterrupted logistics compared to neighboring ASEAN markets drove Malaysia's market in 2021H1," says Ahmed M. Ahmed, Market Analyst for Malaysia Mobile Devices.

A subsidy program was rolled out to provide the Bottom 40 economic group (B40) with affordable access to smartphones through telco operators. Qualified individuals were able to receive a smartphone bundled with a data plan to stay connected during lockdown periods. Ahmed adds, "Top vendors used this opportunity to partner with operators and expand through this channel. This includes vendors that are not considered a strong player in the telco space, like Xiaomi."

Both Samsung and Xiaomi cemented their dominance in Malaysia's market. The combined shipments of both brands accounted for nearly 50% of all smartphones in 2021. "Honor's reentry in late 2021 received a muted response. However, the gap left by Huawei in the high-end Android market can be shaken by a familiar brand," says Ahmed.

IDC is forecasting a flat growth for smartphones in 2022. In a step toward post-pandemic recovery, the government is encouraging consumers to increase spending on other products and sectors. A new tax rebate is aimed to entice consumers to buy new energy-efficient home appliances. Also, another tax rebate is focused to promote local tourism during 2022. We will see consumer demand for smartphones drop as spending on entertainment and elsewhere take priority.

Despite over 28% of smartphones shipped in 2021 being 5G capable, 5G is still not offered by the major players in the country. Malaysia is lagging other countries in Southeast Asia. After the initial hesitancy, the top operators have welcomed the latest cabinet decision to relinquish 70% of its stake in Digital Nasional Berhad. This shareholding agreement will kickstart the commercial rollout of 5G. Going forward, 5G will be a strong driver for consumer upgrades, with projections for nearly 50% of shipments in 2023, up from 36% in 2022. The looming merger between Digi and Celcom is set to make the new entity the largest telco operator in the country. "Enticing consumers to stay with attractive 5G plans and bundles will be a high priority for Maxis and other telcos to remain competitive in the market," added Ahmed.

To know more about the IDC’s Worldwide Quarterly Mobile Phone Tracker, please contact Ahmed M. Ahmed at [email protected]. For media inquiries, please contact Fenny Tjandradinata [email protected]  or Jane Yap at [email protected].